Payment distribution system and method

ABSTRACT

The vending machine system automates the distribution of funds via a payment instrument. The system verifies the identity of the user to confirm the proper recipient of the funds. The system applies rules when performing transactions, including the distribution of funds. The system also activates the payment instrument if required. The system also allows a user to void a payment instrument to recapture the funds associated with the voided instrument. The system dispenses the payment instrument and tracks the funds of the payment instrument for the user.

CROSS-REFERENCE TO RELATED APPLICATIONS

Not Applicable.

STATEMENT REGARDING FEDERALLY SPONSORED RESEARCH OR DEVELOPMENT

Not Applicable.

REFERENCE TO A MICROFICHE APPENDIX

Not Applicable.

RESERVATION OF RIGHTS

A portion of the disclosure of this patent document contains materialwhich is subject to intellectual property rights such as but not limitedto copyright, trademark, and/or trade dress protection. The owner has noobjection to the facsimile reproduction by anyone of the patent documentor the patent disclosure as it appears in the Patent and TrademarkOffice patent files or records but otherwise reserves all rightswhatsoever.

BACKGROUND OF THE INVENTION I. Field of the Invention

The present invention relates generally to a payment distribution systemand method. The present invention distributes money to local users afteridentifying the payee. The present invention also allows a local user todistribute or otherwise transfer money to third parties. The payee maychoose to receive the payment or reroute the payment to a third party.The present invention also relates to distribution systems forcontrolled-environment facilities, including prisons and jails. Thepresent invention also relates to a system for automating thedistribution of payment instruments, including, but not limited to,money, credit, financial instruments, and other payment instruments tousers via a vending machine.

II. Description of the Known Art

Certain problems exist with the known art. Using card payment methodssuch as debit cards, credit cards, or gift cards has become an extremelypopular way to make payments in lieu of cash. However, the card paymentmethod has traditionally required human interaction or long processingtimes due to mail delivery. The present invention provides an automatedmethod that dispenses and activates debit, credit, gift card, or othertoken-based payment instruments.

Often inmates being released from jail receive a debit card preloadedwith any unspent funds from their incarceration time. An officertypically performs the task of providing the debit card. The officerretrieves a debit card from a stocked inventory of inactive debit cards,loads the card with the inmate's unspent balance, activates the debitcard for use, and distributes the debit card and the documentation, suchas terms and conditions, to the inmate. This process consumes asubstantial amount of an officer's time who also has important securityduties which can often interrupt the procedure. Providing the debit cardlimits the other duties that the officer could be performing.

Involving an officer also creates a dangerous situation in a controlledenvironment facility. Such danger increases when an officer's attentionis directed to distributing a debit card instead of monitoring inmatebehavior that could lead to physical harm.

Inactive debit card stock can also be used to commit fraud. Anunscrupulous officer or jail staff member could fraudulently transfer aninmate's funds onto a debit card for personal gain instead of properlydistributing the funds to the inmate. To avoid the fraudulent transfers,access to inactive debit cards is secured, tracked, and audited on aregular basis.

Terms and conditions of payment instruments like debit cards must bedistributed with the payment instrument as legally required. In securedenvironments such as jails, the staff may be untrained and unaware ofsuch a legal requirement. Such lack of training could potentially resultin the distribution of the debit card to the inmate without properdocumentation.

The known art requires human involvement for distribution of the funds.Such human involvement requires the payee to wait for a user and allowsopportunities for fraud and mistakes. Bank tellers often distributedebit cards to customers for replacements or personalization. In thesecases, the person receiving the debit card must wait in line to see aperson and then wait as the various steps of stock retrieval,activation, and distribution are performed manually.

Convenience store employees often activate gift cards for customers.Many stores today provide displays of gift cards available for manyvendors. A customer typically selects a gift card and gives the card tothe store employee with a payment method, including but not limited tocash or credit. The store employee must verify identity, process thepayment method, and activate the card with the appropriate amount. Sucha process potentially leads to issues that could arise due to poortraining or an understaffed workforce that could cause problems.

If the identity verification process is skipped by the store employee,money laundering can be performed which could leave the store liable forlosses and legal action. Improper activation of the card may upset thecustomer. Financial losses can occur if the payment method is notcounted and entered properly. Large scale fraud can occur ifunscrupulous employees are given access to the system. Individual giftcards can also be removed from displays and lost prior to activation,resulting in missed sales opportunities.

In money laundering activities, criminals commonly attempt smalltransactions spread across a large number of locations in order to hidethe actual volume of transaction amounts. With individual employees,such laundering is difficult to combat and requires coordinated activityacross an organization. The present invention provides a networkablesolution which automates the process of verifying total transactionvolume across a network of automated distribution systems incommunication to reduce such money laundering.

Therefore, the present invention is needed to provide a unique vendingmachine that automates the distribution of funds while applying rulesfor dispensing the funds. Such a vending machine applies the rules tolimit fraud, theft, unlawful actions, and other mistakes whendistributing funds. The present invention also provides a vendingmachine for dispersion of funds to third parties.

SUMMARY OF THE INVENTION

The present invention relates to a vending machine that automates thedistribution of funds to a user, the payee. A vending machine of thepresent invention applies rules for distributing funds to the payee. Thesystem identifies the payee and the payee's funds. The system appliesrules to determine the funds available to the payee. The system may payall funds owed to the payee. The system may also apply rules that limitthe amount that can be distributed to the user.

The system may also allow the payee to select the type of paymentinstrument received from the vending machine of the present invention.The user selects a credit card, debit card, gift card, cash, etc. Thesystem applies rules to determine the payment instrument available tothe user. The system then delivers the allowed payment instrument to thepayee in the amount approved by the system.

The system then distributes the payment instrument to the payee via thevending machine. The computing system of one embodiment applies therules for the vending system. The computing system authorizes theloading of the payment instrument with funds. The computing systemand/or the vending machine can activate and load the payment instrumentswith the requested funds.

If required, the vending machine also activates the payment instrumentfor use by the payee. In some embodiments, legal documentation or otherinformation must be delivered to the payee. The vending machine maysupply an electronic or hard copy version of the documentation and/orinformation to the payee. The vending machine confirms that the userreceived the documentation. The system of one embodiment verifiesreceipt of the documentation. The system may require a user to enter aninput indicating that the user received the documentation. The systemmay also deliver documentation and require the user to scan or take apicture of a bar code or other identifier indicating that the userreceived the documentation.

The computing system and/or the vending machine activates and/or loadsthe payment instruments with the requested funds after confirmation ofreceipt of the payment instrument by the payee. The computing systemand/or the vending machine of one embodiment activates and/or loads thepayment instruments with the requested funds after confirmation of thepayee receiving the documentation, such as terms and conditions. Thecomputing system and/or the vending machine of one embodiment activatesand/or loads the payment instruments with the requested funds afterconfirmation of the payee agreeing to the terms and conditions of thepayment instrument.

The system also enables a user to redistribute the payee's funds tothird parties. The system requests the user to select a particularaction. Such actions may include, but are not limited to, requestingfunds for the payee, purchasing goods and/or services, and transferringfunds to a third party. The user may pay for goods and/or services. Theuser may also pay existing debts for prior purchases. The user may alsotransfer money to third parties. Such transfers may cover existingfines, debts, or other payments that the payee may want to make from theavailable funds.

The system may also track the funds associated with the paymentinstrument dispensed. The system determines any unused funds of thepayee. The system may allow the user to cancel the prior paymentinstrument having the unused funds. The system then adds the unusedfunds to the current payment instrument or returns the funds to theuser's account. The system applies rules to determine if the user shouldbe given the option to cancel the prior payment instrument and reclaimthe funds that were previously disbursed. The system may also charge afee for cancelling the prior payment instrument.

A person, including but not limited to an inmate, approaches a vendingmachine type system. The inmate provides identity information to theunit. The unit may give the inmate information about current balance,previous transactions, and/or payment distribution options. The systemevaluates the person's identity and historic activity to determine theavailable options for the user. For example, the system may limit thenumber of distributions to a single inmate over a period of time.Conversely, if the inmate was previously issued a payment instrument,such as a debit card, but never activated the card properly, the vendingmachine may dispense a new payment instrument to the user.

The system may also implement a rule that limits the transaction amountsover a time period. The system may also require the inmate to receivemultiple payment instruments if a single payment instrument cannotprocess the entire refund amount.

Another rule may require an inmate to authorize or sign other documentsbefore receiving released funds. Another rule requires the user to agreeto the terms and conditions of the payment instrument prior toactivating the instrument.

All activity will be logged for alerts and general reporting. Picturescould be taken for future verification of identity. Biometrics couldalso identify the payee.

Once the person's identity is verified and choices are presented, theperson may select to be vended a payment instrument like a debit card.The debit card would typically be packaged with the documentation arepresented together, for example, a package that couples both a plasticcard and documentation, for receipt by the user. The system may alsopresent the inmate with terms and conditions electronically thatrequires confirmation of the agreement before authorizing the vendingoperation. If electronic confirmations are required, the systemelectronically records the inmate's acceptance of the agreement as proofof delivery.

After the payment instrument is vended to the inmate, the paymentinstrument must be associated with the inmate and activated. The systemof one embodiment automatically activates the payment instrument andassociates the instrument with the payee by tracking which paymentinstrument is vended to the inmate. In another embodiment, the systemcould require the inmate to call an interactive voice response systemand enter information about the payment instrument and possibly identityverification information.

In another embodiment, the system requires scanning a barcode on thepayment instrument on a barcode reader on or off the vending machine forverification. Another embodiment may require the user to swipe the debitcard through a magnetic stripe reader or entry of an identifier of thepayment instrument on or off the vending machine. Such identification ofthe payment instrument could be done by an app on a mobile device,either with manual entry, using the camera, or other mobile device entrymethods.

Based on the activation information, the system will identify the inmateand payment instrument associated with the transaction. If the inmate isallowed to perform the transaction, the vending machine activates thepayment instrument. The system allocates any funds involved in thetransaction to the payment instrument. The payment instrument will thenbe “live” and ready for use.

The system also provides a resolution if a payment instrument is damagedor lost. The inmate may be given the option through the system to void apreviously distributed payment instrument and receive anotherinstrument. When voiding a previously distributed instrument, the systemverifies the identity of the payee. The balance of the paymentinstrument may be checked against rules for the transaction. Other rulesmay be enforced such as number of voids within a certain time period. Ifthe system authorizes the transaction, the original payment instrumentwill be voided and rendered unusable for future transactions. The systemvends a new payment instrument activated with the unused funds from thevoided payment instrument. Another embodiment may return the unusedfunds to the user's account. In some embodiments, they system may applya transaction fee applied to the transaction.

In some embodiments, a communication system will be integrated with thedistribution system which could allow technical support to inmates.

In some embodiments, the distribution system may also be used as astandard vending machine. In these embodiments, the distribution systemmay vend food or other items in the same vending machine as paymentinstruments are distributed.

In some embodiments, the distribution system may allow cash or creditcard deposits to be taken and applied to an account for the benefit ofan incarcerated individual.

In some embodiments, the distribution system may allow purchasing ofphone time to communicate with inmates.

In some embodiments, the distribution system may allow purchasing ofvideo visitation time to communicate with inmates.

In some embodiments, the distribution system may allow purchasing ofemail credit for communication with inmates.

In some embodiments, the distribution system may allow cash or creditcard payments to be made for existing debts the user might have or forother transactions the person might want to perform such as paying finesor licensing fees.

In some embodiments, the distribution system would have an integrated orconnected printing device which could print checks for distribution toinmates. In some embodiments, the distribution system would have anintegrated or connected printing device for receipts. In someembodiments, the distribution system would have an integrated orconnected printing device for printing terms and conditions for paymentinstruments.

In some embodiments, the distribution system would enable video or audiocommunication with incarcerated individuals. In these embodiments, thedistribution system might have an integrated telephone handset, camera,microphone, or other communication accessories.

In some embodiments, the distribution system would enable othernon-financial transactions. For example, registering for inmatevisitation appointments, requesting facility assistance, getting generalfacility information, watching training videos, and the like.

In some embodiments, the distribution system would alert support staffif a malfunction were detected.

In some embodiments, the inventory of payment instruments is tracked.Reports and alerts can be generated based on the inventory of thepayment instruments.

In some embodiments, the distribution system consists of multiplevending units connected by a central server.

In some embodiments, rules would preclude distribution of a paymentinstrument while inmate is incarcerated.

In some embodiments, the distribution system would include voice promptsto provide information to the user.

In some embodiments, the inmate may initiate a payment to an outsideparty. In this case, the inmate would provide information about theoutside party which might include name, address, phone number,relationship, or the like. The inmate would provide an amount to bedisbursed to the outside party. The inmate would provide an identityverification method for the outside party, for example a password whichwould be required for the outside person to obtain the payment. Theoutside party would use the distribution system to identify themselvesand enter the identity verification password. If identity is matched andrules allow the transaction, the debit card would be vended to theoutside party. The outside party would then use the distribution systemto activate the debit card with the amount specified by the inmate.

In some embodiments, multiple payment instruments may be vended from thesame machine. Rules can be established to determine which, if any,payment instruments are available for distribution to an identifiedindividual.

In some embodiments, the distribution system acts as a remote payment ormoney transmission system. For example, a parent could send their childmoney from a remote location by using the internet to authorize thedistribution of a payment instrument and amount. The child, potentiallylocated in a different city or country, could receive a vended paymentinstrument and activate it to receive the funds sent from the parent.Unlike some money transmission technologies, this would require no smartphone or human involvement to receive the payment.

In some embodiments, the distribution system would track totaldistributions to an individual or payments from an individual andrestrict distributions which would exceed a set dollar amount over aperiod. In some embodiments, the distribution system would identifypotentially suspicious transactions and alert for potential moneylaundering or fraudulent activities.

In some embodiments, charity distributions for homeless or hunger reliefprograms could be made through the automated distribution system. Anumber of vending systems could be distributed in an area with a highhomeless population which contain both food vending items and paymentinstruments. The homeless person could register an identity and receivedefined benefits from the charity organization through any of thevending machines connected to the network. A centralized server wouldverify the identity and authorize the vending of food and paymentinstruments based on the person's history. Limits could be establishedto prevent abuse. Reporting could be provided to the charity agency toverify distributions and identify patterns of need. These systems couldstrongly prevent abuse, reach people in the areas that distributioncenters are not present, eliminate long lines, and remove the stigmafrom receiving identified charity distributions.

It is an object of the present invention to dispense funds to payees viaa vending machine.

It is another object of the present invention to automate the process ofdistributing payment instruments to a payee.

It is another object of the present invention to apply rules whendistributing funds to a payee.

It is another object of the present invention to provide the payee withoptions for distributing the funds to the payee.

It is another object of the present invention to track funds on adistributed payment instrument.

It is another object of the present invention to allow voiding apreviously distributed payment instrument to recover the funds of thevoided payment instrument.

It is another object of the present invention to allow users options forthe method of receiving funds.

It is another object of the present invention to enable the user topurchase goods and/or services.

It is another object of the present invention to enable the user to payexisting debts and/or fines.

It is another object of the present invention to enable the user totransfer funds to a third party.

These and other objects and advantages of the present invention, alongwith features of novelty appurtenant thereto, will appear or becomeapparent by reviewing the following detailed description of theinvention.

BRIEF DESCRIPTION OF THE DRAWINGS

In the following drawings, which form a part of the specification andwhich are to be construed in conjunction therewith, and in which likereference numerals have been employed throughout wherever possible toindicate like parts in the various views:

FIG. 1 is a schematic view of one embodiment of the present invention;

FIG. 2 is a perspective view showing one embodiment of the presentinvention;

FIG. 3 is a flow chart showing a process of one embodiment of thepresent invention;

FIG. 4 is a flow chart showing a process of one embodiment of thepresent invention;

FIG. 5 is a flow chart showing a process of one embodiment of thepresent invention;

FIG. 6 is a flow chart showing a process of one embodiment of thepresent invention;

FIG. 7 is a flow chart showing a process of one embodiment of thepresent invention;

FIG. 8 is a flow chart showing a process of one embodiment of thepresent invention; and

FIG. 9 is a flow chart showing a process of one embodiment of thepresent invention.

DETAILED DESCRIPTION

A vending machine system 100, such as a vending machine, as shown inFIGS. 1 and 2 , automates the distribution of funds to a user, such as apayee. The vending machine system 100 applies rules for distributingfunds to the payee. The system 100 identifies the payee and the payee'sfunds. The system 100 applies rules to determine the funds available tothe payee. The system 100 may pay all funds owed to the payee. Thesystem may also apply rules that limit the amount that can bedistributed to the user.

FIG. 1 shows the vending machine system generally shown as 100. Thevending machine system 100 provides networked vending machines 102 thatcommunicate with a server 104 over a network 122. The system 100 caninclude one or more vending machines 102 connected to a server 104. Theserver 104 of one embodiment tracks users, the user's account, theuser's purchases, the identity information, the balances of theaccounts, and the account information. In one embodiment, the vendingmachine 102 queries the server 104, such as a central server, fordetermining whether to authorize a transaction. The vending machine 102can also implement the rules without a server to authorize atransaction.

The rules can be applied to a specific vending machine or groups ofvending machines. Rules can be set to apply to a user, such as aspecific inmate, or a set of users, such as a set of inmates. Theserules may be applied to a set of users, such as a set of inmates,identified by location, geographic location, housing location,classification, inmate classification, age, gender, safety rating,indigent status, purchase history, account balance, account debt orother criteria.

The system 100 stores the stored identification data locally and/orremotely. In one embodiment, the vending system 100 stores the storedidentification data on a server 104. The vending machines 102communicate with the server 104 wirelessly or through a wiredconnection.

Identification of the user and application of the rules for the user'stransactions may be applied on a computing system locally on vendingmachine 102, remotely on server 104, or both locally on the vendingmachine 102 and server 104. In one embodiment, a computing system isinstalled with the vending machine for completing the transactions. Acomputing system may communicate with the vending machine using amulti-drop bus (MDB) interface, USB, Bluetooth, WIFI, Ethernet,electrical signals, acoustic signals, visual signals, other standardcomputer or vending machine communication interfaces, or the like. Thecomputing system may identify the user, authenticate the user, apply therules, and bill the user.

When performed locally, the computing system performs all of the tasksassociated with purchasing and dispensing the item. The computing systemapplies the rules and identifies the purchase price of the item.

When performed on server 104, the computing system may be installed withthe vending machine 102. The computing system may perform at least oneof the tasks required for the transaction(s). The server 104 may alsoperform the tasks of identifying the user, authenticating the user, andapplying the rules. The server 104 instructs the operation of thevending machines 102. The server 104 instructs the vending machine 102if the transaction should be allowed.

The system 100 identifies the user accessing the vending machine 102. Anidentification device 106, 110 associated with the vending machine 102collects captured identification data to identify the user. Theidentification device 106, 110 identifies the user of the vendingmachine 102. The identification device 106, 110 captures identificationdata from the user at the time of using the vending machine 102. Suchcaptured identification data may include, but not limited to, apassword, authentication code, or biometric identification.

The identification device 106, 110 may be a keyboard, key pad,biometric, capture device, camera, microphone, fingerprint reader, RFcapture device, a device for receiving of RF signals reflected from aperson and/or absorbed by a person, or other biometric capture device ormechanism, or the like. The identification system captures the capturedidentification data.

The vending machine system identifies the user via stored identificationdata. The vending machine system compares the captured identificationdata with the stored identification to identify the user. Such acomparison may be performed by the server or by the vending machine. Thesystem identifies a user based upon a match of the stored identificationdata with the captured identification data.

The system 100 is implemented on a vending machine 102, such as a kiosk.The vending machine 102 provides hardware for distributing the paymentinstrument to the user. The vending machine 102 includes, but is notlimited to, a processor 106, a card reader 108, an input device 110 suchas a microphone, keypad, keyboard, touchscreen, etc., a cash/coinacceptor 112, a camera 114, a card activator 116, a card delivery system118, and an audio device 120. The processor 106 of the vending machine102 enables the rules to be applied and processes the data between thevending machine 102 and the server 104.

The card reader 108 reads cards including but not limited to ID cards,driver's licenses, credit cards, debit cards, gift cards, etc. Multiplecard readers 108 may be installed in the vending machine 102 to read thedifferent types of cards. The card reader can identify the insertedcards. Such identification of the inserted card can activate the card,determine the balance of the card, initiate a transaction, identify theuser, etc.

The input device 110 of the vending machine 102 accepts user input. Suchan input device includes, but is not limited to, a keypad, a keyboard, atouchpad, a mouse, a touchscreen, a biometric input device, such asfingerprint reader 111, etc. The user enters the transaction data intothe input device 110. Such transaction data may include, transactionamount, type of transaction, delivery method, etc. The user may alsoenter the user's identification to the input device 110 to identify theuser.

The cash/coin acceptor 112, also shown as cash acceptor 112A and coinacceptor 112B, accepts cash and/or coins into the vending machine 102.The cash/coin acceptor 112 allows the user to use the added funds in thetransaction. The vending machine 102 accounts for the inserted funds tobe applied to the user and the user's transaction(s). The vendingmachine 102 also returns change through coin return 113.

The camera 114 of one embodiment captures an image of the user toidentify the user. Authentication of the user's identity enables thevending machine 102 to complete a transaction. Authentication of theuser enables the system to identify the user and the funds associatedwith the user. Authentication of the user also allows the system todisburse any payments, food items, incentives, or other items to bedisbursed to the user.

The card activator 116 activates the card to be disbursed to the user.The card may be activated by reading card activation information,including but not limited to, a bar code or magnetic strip, reading thenumbers and/or code of the card, inputting a PIN number, etc. The cardactivator enables usage of the payment instrument.

The funds delivery system 118 dispenses a payment instrument to thepayee. The funds delivery system 118 delivers the payment instrumentapproved by the system. The funds delivery system 118 may deliverpayment instruments, including but not limited to, cash, check, credit,credit card, debit card, etc.

The audio system 120 provides any audible messages to the user. Suchaudible messages include instructions, confirmations, warnings, alerts,and alarms. The audio system 120 may activate an alarm if a user failsto pick up a payment instrument.

The system 100 provides a vending machine that distributes funds and/orother items to users. The system 100 of one embodiment also allows usersto complete transactions with third parties, including vendors,institutions, facilities, businesses, friends, family, and other thirdparties. Such transactions are shown in FIGS. 6-8 . These transactionsinclude distributing funds to a user, such as a payee; purchasing itemsand/or services; transferring funds to a third party; and distributingitems and/or charitable goods and/or funds to a user.

The system 100 identifies the user accessing the vending machine 102prior to completing a transaction. Identifying the user enables thesystem to customize the user's experience. Identification enables thesystem to identify any funds and/or items available to the user. Thevending machine 102 identifies the user via one of the input devices110, including but not limited to a keyboard, keypad, biometric scanner,sensor, and/or reader, camera 114, etc.

FIG. 3 shows the process of distributing funds to a payee. The systemidentifies the payee at Identify Payee Step 200. The system 100 maystore verified identification data locally on the vending machine 102 orremotely via a server 104 or other storage. The system captures thecaptured identification data from the user. Such identification dataincludes, but not limited to, a login/password, biometric data, PIN,code, retinal scan, fingerprint, facial recognition, voice recognition,etc.

The system compares the captured identification data to the verifiedidentification data. The system searches for a match of theidentification data to identify the user accessing the vending machine102. Once the user is verified, the system 100 allows the user toperform a transaction on the vending machine 102. Identifying the userallows the user to access funds, any distributions, and/or payments tothe user. The user may also access the user's account information.

The system 100 identifies the funds of the user at Identify Funds ofPayee step 202. The account information that identifies the user and theuser's funds may be stored locally on the vending machine 102 or theserver 104. The system of one embodiment displays the fund dataassociated with the user on the vending machine 102.

In a controlled environment facility, the user, such as an inmate, mayhave one or more accounts. The user may access the account to purchaseitems and other services. Outside parties, such as friends and familymay add funds to the user's account. This account may serve as a releaseaccount, commissary account, trust account. The facility must return thefunds to the user upon release. Some of these funds may be transferredto third party service providers for services that were not rendered.These third party service providers must return the funds to the userfor any unused funds. The vending machine 102 dispenses a paymentinstrument that includes the funds of the user's account(s) and anyunused money with third party service providers.

The user, such as the payee, can then enter a requested amount of fundsto be distributed by the vending machine 102. The user enters therequested amount at Enter Amount to be Distributed Step 204. The systemlimits the user to the funds available to the user. One embodiment ofthe invention applies rules that limits the user to a particular amountof funds. The funds may be limited by a time period, behavior, priortransactions, market conditions, remaining incarceration amount, balanceamount, etc.

The system determines the amount allowed to be distributed to the user.The system then determines if the requested amount is within theapproved amount at Authorize Distribution Query 206. The system willthen distribute the requested funds if the amount of funds is approvedby the system. If the system 100 does not approve the requested amount,the system may inform the user of the approved amount and ask the userto request an amount within the approved range. In another embodiment,the system may distribute only the approved amount and inform the userof the approved amount that was disbursed.

FIG. 4 shows another embodiment of the present invention for dispensingfunds to the payee. The system identifies the payee at Identify PayeeStep 210, identifies the funds of the payee at Identify Funds Step 212,and requests the amount to be distributed at Enter Amount to DistributedStep 214 as described above. The system also authorizes the distributionand distributes the funds at Authorize Distribution Query 218 andDistribute Funds Step 220.

The process shown in FIG. 4 differs from the process shown in FIG. 3 inthat the payee selects the type of distribution. The system may allowthe payee to select the type of payment instrument received from thevending machine as shown in FIG. 4 . The user selects the paymentinstrument on which the funds will be applied. The user selects creditcard, debit card, gift card, check, cash, or other payment instrument.The system determines if such a requested amount for the selectedpayment instrument is authorized by the system. The system distributesthe requested amount on the requested payment instrument if thedistribution is authorized. Otherwise, if the system 100 does notapprove the requested amount, the system may inform the user of theapproved amount for the selected payment instrument and ask the user torequest an amount within the approved range. In another embodiment, thesystem may distribute only the approved amount and inform the user ofthe approved amount disbursed.

FIG. 5 shows an embodiment of the present invention in which the vendingmachine allows a user to void a prior distribution. Each distribution isassociated with the payee. The system stores identification informationabout the payment instrument (Payment ID) and the ID of the payee. Thesystem associates the User ID with an Instrument ID of the paymentinstrument distributed user with the User ID. The system can track thefunds associated with the payment instrument and the funds of the payee.

The process shown in FIG. 5 must identify the payee at Identify PayeeStep 222 as discussed above. The system identifies the funds of thepayee at Identify Funds Step 224. When identifying the funds, the systemdetermines if the user has any unused funds previously distributed on apayment instrument. The system determines which payment instruments, ifany, continue to have funds or may have never been activated. Thesepayments instruments that continue to have funds could potentially bevoided.

The system requests if the user would like to void any priordistributions at Void Prior Distribution Query 226. The user can selectto void a prior distribution or to proceed with requesting adistribution. If the user selects not to void a payment instrument, theuser requests the vending machine to distribute an authorized amount atDistribute Authorized Amount Step 228 as discussed above.

The user may select to void a specific payment instrument or all paymentinstruments associated with the payee. The system determines if the userand the payment instruments meet the requirements for voiding thepayment instrument. Such requirements may be based on the amount offunds associated with the payment instrument, the date the paymentinstrument was activated, the number of payment instruments voided bythe user, the number of payment instruments voided by the user over atime period, the status of the user, the behavior of the user, any priormisuses of the void function by the user, etc.

The user selects the payment instruments to be voided. The system thendetermines if the payment instrument meets the requirements to be voidedat Allow Distribution to be Voided Query 230. If the payment instrumentmeets the requirements to be voided, the system voids the identifiedpayment instruments at Void Prior Distribution Step 232. The funds ofthe voided payment instrument are then added to the payee's funds. Theuser selects the usage of the funds at Distribute Authorized Amount atDistribute Step 234.

The user may then select how the funds are used. Those funds may beapplied to a new or existing payment instrument. The user may use thosefunds to purchase goods and/or services. The user may also choose totransfer funds to a third party.

FIG. 6 shows the different types of transactions that a user, such asthe payee, can enter with the vending machine 102. Allowing multipledifferent types of transactions increases the functionality of thevending machine 102. Such a vending machine 102 distributes funds to apayee, transfer's a payee's funds to a third party, and allows purchasesof goods and/or services.

The system identifies the payee at Identify Payee step 236 as describedabove. The system also identifies the funds of the payee at IdentifyFunds step 238 as described above. The system requests the type oftransaction to be performed at Request Transaction Type Step 240. Theuser, payee, responds by inputting the transaction type of the requestedaction to be performed by the vending machine.

The user may request one of many different options. One embodiment ofthe vending machine allows for distribution of funds, transferringfunds, purchasing goods and/or services, distribution of charitablegifts, items, funds, or other charitable donations. FIG. 6 showsselecting Distributing Funds Step 244, Paying Third Parties Step 246,and Purchasing Step 248.

The system determines the transaction input by the payee at Transactionquery 242. The system then proceeds with the designated transaction. Thesystem may distribute funds at Distributing Funds Step 244, transferfunds to a third party at Paying Third Parties Step 246, or purchasegoods and/or services at Purchasing Step 248. The system performs theparticular transaction identified by the user in the input transaction.

The system may distribute funds as described above and shown in FIGS.3-5 . The system may also pay third parties as shown in FIG. 7 . Thesystem may also allow for purchase of goods and/or services as shown inFIG. 8 .

FIG. 7 shows the transfer of funds or payments to a third party at PayThird Parties 246. The system of one embodiment must authorize thetransaction prior to transfer of the funds. Another embodiment allowsthe transaction as long as sufficient funds are available for thetransfer.

The user identifies the third party to be paid at Identify Third Partystep 252. The user provides identifying information concerning the thirdparty. Such information could include, but is not limited to, name,address, location, vending machine location, social security number,driver's license number, a unique identifier, bank account information,etc. The user provides sufficient information for the system to identifythe third party and confirm that the funds are properly transferred tothe third party. The system or the user may create a password requiredfor the third party to access the transferred funds.

The user must also identify the amount to be paid or otherwisetransferred to the third party at Identify Amount Step 254. The userenters amount to be paid or otherwise transferred, not to exceed theuser's balance. The user enters the amount into the vending machine viaan input device.

The system then determines whether the transfer of funds should occur.One embodiment simply confirms that the user has sufficient funds forthe transfer. Other embodiments of the system apply rules to determinewhether the transfer should occur. Such rules are applied at AuthorizePayment Query 256. If the payment is authorized, the system transfersthe funds to the third party. The funds are transferred from the user'saccount to an account for the third party.

The system then notifies the third party that the funds are available tothe third party at Notify Third Party Step 258. The notification mayinclude the name of the user that transferred the funds, the amount offunds transferred, the date that the funds were transferred, the datethat the funds will be available, the date that the funds will expire ifavailable, the location at which the funds will be available, andinstructions for receiving the funds. In one embodiment, the transferormay provide a password to the system and to the transferee for receivingthe funds. The user may supply the password to the transferee, or thesystem may supply the password to the transferee.

The third party may then access the funds at a vending machine or kiosk.The system may also automatically transfer the funds to a third party'sbank account or other system for payment.

The system may also deny the transfer at deny payment step 260. Thesystem informs the user that the payment and/or transfer to the thirdparty was denied. The user may then enter a different transaction. Inone embodiment, the system provides the reason for denying the transfer.

FIG. 8 shows the process of purchasing good(s) and/or service(s) atPurchase Request 248. The user (purchaser) identifies the item and/orservice to be purchase at Identify Item/Service Step 262. The userselects an item and/or service via the input device of the vendingmachine. The system identifies the purchase price of good and/orservice. In one embodiment, the purchase price may be customized to theuser depending on if the user is indigent, federal prisoner, stateprisoner, or other need based user.

The system then determines whether the user should be allowed topurchase the goods/services at Authorize Purchase Step 266. Oneembodiment simply determines if the user has the available fundsrequired to purchase the goods/services. Another embodiment appliesrules to determine if the user should be allowed to purchase thegoods/services. If the purchase is allowed, the system completes thepurchase transaction at Complete Purchase Transaction Step 268.Otherwise, the system denies the purchase transaction at Deny PurchaseStep 270.

FIG. 9 shows an embodiment of the vending machine that distributes fundsand or items to a recipient. Such recipient may be on Medicare,Medicaid, recipient from a charitable organization, indigent, or otherperson in need. The system verifies the recipient to confirm that therecipient qualifies for the funds and/or other distributions at IdentifyRecipient Step 272 as described above. The system also identifies thedistribution to the recipient at Identify Distribution Step 274. Such adistribution may include money, debit cards, credit cards, gift cards,food, grocery items, personal hygiene items, etc. The system determinesif the distribution is authorized at Authorize Distribution Step 276. Ifthe distribution is authorized, the system distributes the distributedgoods and/or funds at Distribution Step 278.

The system has been described as applying rules to determine if aparticular distribution or transfer is allowed. The system applies rulesdepending upon the type of transactions. The rules may vary according tothe user, the user's behavior, the status of the user (indigent, federalprisoner, state prisoner, etc.), the location of the user, etc.

The system evaluates the person's identity and historic activity todetermine what options are available and the applicable rules. Forexample, the system may limit the number of distributions to a singleinmate over a period of time. Conversely, if the inmate was previouslyissued a payment instrument like a debit card but never activated theinstrument properly, the inmate might be given a new payment instrument.

The system may also implement a rule that limits the transaction amountsover a time period. The system may also require the inmate to receivemultiple payment instruments if a single payment instrument cannotprocess the entire refund amount.

Another rule might require an inmate to authorize or sign otherdocuments before receiving released funds.

The system logs all activity and transactions for alerts and generalreporting. The system may capture pictures of the users for futureverification of identity. Biometrics could also identify the payee.

The rules required for distributed funds are applied at Step 206 shownin FIG. 3 , Step 218 shown in FIG. 4 , Distribution Steps 228, 234 ofFIG. 5 . Such rules may limit the amount of funds dispensed to a user toless than the user's account balance. Such rules may limit transactionsto a maximum amount in situations, including but not limited to:

a) a limited amount during a single transaction;

b) a limited amount over a period of time;

c) a limited amount due to a user's behavior;

d) a limited amount based on cost of living in location;

e) a limited amount based on location;

f) a limited amount based on status in facility (state inmate, federalinmate);

g) to a limited amount based on user's financial history;

h) a limited amount based on period of time that user will beincarcerated; and

i) Other limits that may be required.

During the distribution of the payment instrument, the system mayrequire verification that the funds were distributed. Such a system maytake an image of a user to verify the release of the funds and thepayment instrument. Other embodiments may require the entry of PIN orother authentication that identifies the user. The release of paymentinstruments may require delivery of documentation with the paymentinstrument. This document may provide information concerning the paymentinstrument and usage of the instrument. The vending machine verifiesthat the documentation is provided to the user. The system may require asignature that the document was provided, scanning of the document,entry of an identifier on the documentation, scanning a bar code, takinga picture of a barcode or other identifier, etc.

In one embodiment, the system and the vending machine are implemented ina controlled environment facility, such as a prison or correctionalfacility for use by inmates. The controlled environment facility storesverified identification data for verifying the identity of the inmates.The vending machine verifies the identity of the inmate for usage of thevending machine. In one embodiment, the system does not allow usage ofthe vending machine until the inmate's identity is verified by thesystem.

The system may operate according to the rules defined by the controlledenvironment facility. These rules can vary according to geographiclocation, the type of facility, the user, the time the user has spent inthe facility, the time the user has been sentenced to the facility, etc.The controlled environment facility selects the rules to apply to theuser.

The controlled environment facility may establish rules that limit thenumber of transactions and/or the amount of funds that can betransferred and/or distributed. Such rules may limit the number oftransactions for a user, limit the number of transactions for a userduring a given time period, limit the amount of funds available to auser during a single transaction, limit the amount of funds available toa user, limit the amount of funds available to a user over a given timeperiod, limit the time periods when a user may enter a transaction.

The system may apply a rule that limits a user to a maximum number oftransactions. The system may limit the user to the maximum number oftransactions. The system denies any transactions that will exceed themaximum number of transactions for the user. The system may limit theuser to the maximum number of transactions during a given time period.The system denies any transactions that will exceed the maximum numberof transactions for the user during the given time period.

The system may also limit the distribution of the funds to the user. Thesystem may limit the user to a maximum distribution that is less thanthe user's balance. The system denies the transactions that exceed themaximum distribution. The system may limit the user to a maximumdistribution during a given period that is less than the user's balance.The system denies the transactions that exceed the maximum distributionduring the given time period.

The system may also limit transaction(s) to particular times. The systemmay establish an operational time at which the vending machine willperform activities, such as the transactions, purchases, or otherdistributions. Outside of the operational time, the vending machine willperform no activities, such as the transactions, purchase, or otherdistributions.

The controlled environment facility may also establish rules based uponthe user. The facility may apply limits to types of users (state vs.federal), users incarcerated to a particular location, behavior of theusers, the user's balance, the user's release balance, the user's debts,etc.

In some situations, the system applies different rules based on the typeof user. The rules may vary the operational time, the maximumdistribution amount (per transaction and during given time period), andthe number of transactions (total number and amount during given timeperiod). The rules may apply differently to state inmates compared tofederal inmates. The rules may apply differently to state facilitiescompared to federal facilities. The rules may apply differently basedupon geography, cost of living, etc.

The system may also apply the rules based upon the user's financialaccounts and/or financial conditions/situation, debts, etc. The systemmay apply the rules based upon the user's release balance. The releasebalance maintains an account of the user's funds to be provided to theuser at release. The system may apply a rule that only allowsdistributions, purchases, and/or other transfers if the user's releasebalance remains greater than a minimum balance, such as zero. If therelease balance is less than the minimum balance or $0.00, the systemmay deny the transaction.

The vending machine automates the distribution of funds via a paymentinstrument. The system verifies the identity of the user to confirm theproper recipient of the funds. The system applies rules as describedabove when performing transactions, including the distribution of funds.The system also activates the payment instrument if required. The systemalso allows a user to void a payment instrument to recapture the fundsassociated with the voided instrument.

When distributing the funds via a payment instrument, the system mustactivate the payment instrument. The system associates the paymentinstrument with the inmate and activates the instrument. The system ofone embodiment automatically activates the payment instrument andassociates the instrument with the payee by tracking which paymentinstrument is vended to the inmate. In another embodiment, the systemcould require the inmate to call an interactive voice response systemand enter information about the payment instrument and possibly identityverification information. The system may require the user to enteridentifying information for the instrument via an input device, camera,etc.

In another embodiment, the system requires scanning a barcode on thepayment instrument on a barcode reader on or off the vending machine forverification. Swiping the debit card through a magnetic stripe reader orentry of an identifier of the payment instrument on or off the vendingmachine. Such identification of the payment instrument could be done byan app on a mobile device, either with manual entry, using the camera,or other mobile device entry methods.

Based on the activation information, the system will identify the inmateand payment instrument associated with the transaction. If the inmate isallowed to perform the transaction, the payment instrument will beactivated. The system allocates any funds involved in the transaction tothe payment instrument. The payment instrument will then be “live” andready for use.

One embodiment of the vending machine requires distributingdocumentation, such as terms and conditions, with the paymentinstrument. The legal documentation or other information must bedelivered to the payee. The vending machine may supply an electronic orhard copy version of the documentation and/or information to the payee.The vending machine confirms that the user received the documentation.The system of one embodiment verifies receipt of the documentation bythe user. The system may require a user to enter an input indicatingthat the user received the documentation. The system may also deliverdocumentation and require the user to scan or take a picture of a barcode or other identifier indicating that the user received thedocumentation.

The system also allows multiple different types of transactions througha vending machine. The system allows transfer of funds and purchase ofgoods/services. The system also serves as a distribution system fordistributing food, personal hygiene items, charitable donations, WIC, orother payments to a recipient.

From the foregoing, it will be seen that the present invention is onewell adapted to obtain all the ends and objects herein set forth,together with other advantages which are inherent to the structure.

It will be understood that certain features and subcombinations are ofutility and may be employed without reference to other features andsubcombinations. This is contemplated by and is within the scope of theclaims.

As many possible embodiments may be made of the invention withoutdeparting from the scope thereof, it is to be understood that all matterherein set forth or shown in the accompanying drawings is to beinterpreted as illustrative and not in a limiting sense.

What is claimed is:
 1. A vending machine system for dispensing requestedfunds from an inmate's account to a payment instrument dispensed to theinmate within a controlled environment facility upon a request from theinmate, the system comprising: a vending machine; an identificationsystem that captures captured identification data from the inmate, theidentification system comparing the captured identification data toverified identification data wherein matching the verifiedidentification data with the captured identification data identifies theinmate; a computing system determining an amount of the funds of theinmate's account; the vending machine dispensing the payment instrumentaccording to a rule defined by the controlled environment facility,wherein the rule allows dispensing the payment instrument to the inmateand the rule denies dispensing the payment instrument to the inmatedespite the inmate's account having sufficient funds to cover therequested funds, wherein the computing system authorizes the loading ofthe payment instrument with the requested funds prior to use of thepayment instrument if the rule allows dispensing the payment instrument,wherein the payment instrument is valued at less than or equal to theamount of the funds within the inmate's account, wherein the vendingmachine dispenses the payment instrument to the inmate according to therule defined by the controlled environment facility, wherein the rule ismet prior to dispensing the payment instrument to the inmate; whereinthe requested funds are less than the funds within the inmate's account,wherein the rule denies dispensing the payment instrument to the inmatedespite the inmate's account having sufficient funds to cover therequested funds and the inmate authorizing dispensing the paymentinstrument.
 2. The system of claim 1, wherein the rule denies dispensingthe payment instrument that reduces a release balance of the inmate toless than $0, wherein the release balance is a different amount than theamount of the inmate's account, wherein the vending machine dispensesthe payment instrument only if the release balance is greater than $0,wherein the vending machine denies dispensing the payment instrument tothe inmate having the release balance less than $0.
 3. The system ofclaim 1, wherein the rule denies dispensing the payment instrument tothe inmate released beyond a defined time period, wherein the vendingmachine dispenses the payment instrument only if the inmate has beenreleased within the defined time period, wherein the vending machinedenies dispensing the payment instrument to the inmate released beyondthe defined time period.
 4. The system of claim 1, wherein the ruledenies dispensing the payment instrument to the inmate whose inmate'saccount is not marked for distribution, wherein the vending machine onlydispenses the payment instrument if the inmate's account is marked fordistribution to the inmate, wherein the vending machine deniesdispensing the payment instrument to the inmate having the inmate'saccount not marked for distribution.
 5. The system of claim 1, whereinthe rule denies dispensing the payment instrument requested outside anapproved time, wherein the vending machine dispenses the paymentinstrument only if requested during the approved time, wherein thevending machine denies dispensing the payment instrument requested notwithin the approved time.
 6. The system of claim 1, wherein the ruledenies dispensing the payment instrument to the inmate requesting anumber of payment instruments within a determined time period thatexceeds a maximum number of payment instruments to the inmate during thetime period, wherein the vending machine determines the number ofpayment instruments dispensed to the inmate within the determined timeperiod from the request, wherein the vending machine dispenses thepayment instrument only if the number of payment instruments distributedto the inmate is less than the maximum number of payment instrumentsduring the determined time period, wherein the vending machine deniesdispensing the payment instrument to the inmate requesting the paymentinstrument that exceeds the maximum number during the defined timeperiod.
 7. The system of claim 1, wherein the rule denies dispensing thepayment instrument to the inmate requesting an amount that exceeds amaximum amount of funds loaded on a set of payment instruments dispensedto the inmate during a determined time period, wherein the vendingmachine determines the amount of funds loaded on the set of paymentinstruments dispensed to the inmate within the determined time periodfrom the request, wherein the vending machine dispenses the paymentinstrument only if the amount of funds loaded on the set is less thanthe maximum amount of funds loaded on the set during the determined timeperiod, wherein the vending machine denies dispensing the paymentinstrument to the inmate requesting the payment instrument that exceedsthe maximum amount of funds loaded on the set of payment instrumentsdispensed to the inmate during the determined time period.
 8. The systemof claim 1, wherein the rule denies dispensing the payment instrument tothe inmate having existing debt, wherein the vending machine dispensesthe payment instrument only if the inmate has paid all existing debtsidentified by the computing system, wherein the vending machine deniesdispensing the payment instrument to the inmate having existing debtidentified by the computing system.
 9. The system of claim 1 wherein thevending machine offers at least two different types of paymentinstruments to the inmate for distribution of the funds.
 10. The systemof claim 9 wherein the types include a debit card.
 11. A vending machinesystem for dispensing requested funds from an inmate's account to apayment instrument dispensed to the inmate within a controlledenvironment facility upon a request from the inmate, the systemcomprising: a vending machine; an identification system that capturescaptured identification data from the inmate, the identification systemcomparing the captured identification data to verified identificationdata wherein matching the verified identification data with the capturedidentification data identifies the inmate; a computing systemdetermining an amount of the funds of the inmate's account and a releasebalance associated with the inmate, wherein the release balance is adifferent amount than the amount of the funds of the inmate's account,wherein the release balance identifies an amount of funds available tothe inmate at release of the inmate; the vending machine dispensing thepayment instrument if the inmate's release balance is greater than zerodollars, wherein the computing system authorizes the loading of thepayment instrument with the requested funds, wherein the paymentinstrument is valued at less than or equal to the amount of funds in theinmate's account, wherein the vending machine dispenses the paymentinstrument only if the inmate's release balance is greater than zerodollars, wherein the vending machine denies dispensing the paymentinstrument that reduces the inmate's release balance to less than zerodollars, wherein the vending machine loads the payment instrument withthe requested funds from the inmate's account.
 12. The system of claim11, wherein the vending machine dispenses the payment instrument to theinmate according to a rule defined by the controlled environmentfacility, wherein the rule is met prior to dispensing the paymentinstrument to the inmate.
 13. The system of claim 11 further comprising:a barcode scanner of the vending machine, wherein the vending machineactivates the payment instrument after scanning a barcode associatedwith the payment instrument.
 14. The system of claim 11 furthercomprising: a card scanner of the vending machine, wherein the vendingmachine activates the payment instrument after the card scanner scans amagnetic stripe on the payment instrument.
 15. The system of claim 11further comprising: card activation information associated with the cardwherein the vending machine provides the card activation information tothe inmate wherein the vending machine requires entry of the cardactivation information prior to activating the payment instrument,wherein the vending machine does not activate the payment instrument ifthe card activation information is not received by the vending machine.16. The system of claim 11 wherein the vending machine voids apreviously distributed payment instrument, the vending machine addingfunds of the voided payment instrument to the payment instrumentdistributed to the inmate.
 17. The system of claim 11 wherein the inmateis identified by biometric verification.
 18. A vending machine systemfor dispensing requested funds from an inmate's account to a paymentinstrument dispensed to the inmate within a controlled environmentfacility upon a request from the inmate, the system comprising: avending machine; an identification system that captures capturedidentification data from the inmate, the identification system comparingthe captured identification data to verified identification data whereinmatching the verified identification data with the capturedidentification data identifies the inmate; a computing systemdetermining a release balance associated with the inmate and a balanceof the inmate's account, wherein the inmate's release balance isdifferent than the balance of the inmate's account; a transfer amounttransferred to a third party for a purchase of goods or services,wherein the third party did not deliver the goods or render the servicesassociated with the transfer amount; the vending machine dispensing atleast one payment instrument loaded with the transfer amount plus therelease balance associated with the inmate, wherein the transfer amountis not added to the balance of the inmate's account.
 19. A vendingmachine system for dispensing requested funds from a payee's account toa payment instrument dispensed to the payee, the system comprising: avending machine; an identification system that captures capturedidentification data from the payee, the identification system comparingthe captured identification data to verified identification data whereinmatching the verified identification data with the capturedidentification data identifies the payee; a computing system determiningan amount of funds of the payee's account; terms and conditions forusage of the payment instrument dispensed from the vending machine afteridentifying the payee, wherein the terms and conditions must bedelivered to the payee, wherein the vending machine accepts input fromthe payee indicating receipt of the terms and conditions for using thepayment instrument prior to activating the payment instrument with fundsto be dispensed to the payee; the vending machine dispensing the paymentinstrument and the terms and conditions; an identifier printed on theterms and conditions, wherein the identifier is associated with thepayment instrument, wherein the vending machine requires input of theidentifier prior to activating the payment instrument with funds to bedispensed to the payee, wherein the vending machine activates thepayment instrument after input of the identifier.
 20. The system ofclaim 19 further comprising: a bar code reader that communicates withthe vending machine, wherein the identifier is a bar code that isscanned by the bar code reader, wherein the vending machine activatesthe payment instrument after scanning the bar code.
 21. The system ofclaim 20, wherein the vending machine requires input from the payeeindicating that the payee agrees to the terms and conditions prior tothe vending machine dispensing the payment instrument to the payee.